LeoPalace21 Admits to Shoddy Construction: 30,000+ Properties to Be Inspected

May 30, 2018

LeoPalace 21, the operator of over 30,000 budget apartment units across Japan, announced that it has confirmed construction failures in a total of 206 apartment units.

At a press conference on May 29th, company officials admitted that they are in violation of the Building Standards Act (建築基準法) for failing to comply with a building code that requires “boundary walls” reinforced with fireproofing and soundproofing material to be placed between apartment units and ceilings. These walls (kaiheki, 界壁) were either not present or were insufficiently placed in the range mandated by the building code.

LeoPalace21 plans to inspect all 37,853 apartment units it manages by June 2019 and will bring any violations up to code. Its company website says that it has about 16,000 foreign tenants renting its apartments. In full disclosure, Real Estate Japan currently lists some LeoPalace21 apartments for rent on our site.

Kazuto Tajiri, Director and Senior Managing Executive Officer of LeoPalace21, apologized and said that the company takes responsibility for construction management of its properties. The shoddily built units were constructed between 1996 and 2009 and were part of its “6 Series” apartments. Of 290 apartments already inspected, 38 were found to have incorrectly built boundary walls (kaiheki).

The Building Standards Act mandates that such boundary walls must be raised above the ceiling level to prevent fires from spreading.

In the construction plans given to the building contractor, there is a record that boundary walls were required, but in the plans given to sub-contractors, this requirement was missing from the blueprint. Also, when the building was inspected, there was a failure to confirm that the completed building complied with the blueprint.

In addition, in the company’s “2 Series” of apartments built from 1994 to 1995, of 184 apartment units inspected, 168 units were found not to have “boundary walls”. LeoPalace21 says that these defects were discovered in an inspection that was completed at the end of April.

In the first round of inspections, over 200 apartment units were found to have the “boundary wall” defect, but it is expected that this number will increase. The company plans to finish inspecting all of its apartment properties by June 2019 and to finish fixing any defects by October 2019. For buildings with ten apartment units each, construction costs are estimated to be about ¥600,000 ($5,523) per building.

LeoPalace21 denies that it deliberately engaged in shoddy construction and that the fireproofing materials currently used in the ceilings of its properties are safe.